Government Accountability Office (GAO): What It is, History

What Is the Government Accountability Office (GAO)?

The Government Accountability Office (GAO) is an independent and legislative agency that monitors and audits government spending and operations. The agency examines how taxpayer dollars are spent and provides recommendations on how to save the government money or operate more fiscally responsibly. Established in 1921, GAO is also often called the congressional watchdog. It is a non-partisan agency that helps the government find efficiencies in spending, which is why it is said to work for Congress.

Understanding the Government Accountability Office (GAO)

The Government Accountability Office is an independent government agency that is tasked with tracking the use of taxpayer dollars by the legislative and executive branches of government, and providing the results directly to Congress. Put simply, GAO serves as a congressional watchdog over government spending. It monitors the operating results, financial positions, and accounting systems used by the various governmental agencies and conducts routine audits on all branches of government.

The primary goals and objectives of GAO are to:

• Conduct audits of federal government agencies to ensure that funds are properly allocated and not misappropriated, such as audits and reviews of the Pentagon, including U.S. military spending on personnel and weapons systems
• Review government programs and policies to determine if the (established) goals are properly aligned with their original purpose and are being satisfied
• Investigate allegations of illegal activity within the government and issue legal determinations on proposed rules regarding other government agencies

Another set of legislative duties includes establishing standards or the Yellow Book. Also referred to as the Generally Accepted Government Auditing Standards, these principles are used to streamline the process during government audits and providing reports.

The agency is run by the comptroller general who serves a 15-year term. The position is appointed by the president from a bipartisan list of congressional recommendations.

Special Considerations

The GAO has broad authority to review the function and operations of the Federal Reserve—the central bank of the United States.

As such, it conducts reviews of the emergency lending programs that were enacted following the collapse of the housing market and the 2007-2008 financial crisis, which led to the Great Recession. Despite this, it does not have the authority to review individual meetings and monetary policy decisions made by the Fed.

As of May 2021, five out of eight priority recommendations made by the Government Accountability Office were implemented by the Federal Reserve.

History of the Government Accountability Office (GAO)

U.S. government spending and debt rose sharply during World War I. This reality prompted demand for a formal system to review, monitor, and control government expenditures. As a result, the Budget and Accounting Act of 1921 established the General Accounting Office, which assumed budget, accounting, and auditing responsibilities from the U.S. Treasury.

The act also required the president to prepare an annual budget for the federal government. In 2004, the agency's name was changed to the Government Accountability Office after the passing of the GAO Human Capital Reform Act.

Government programs and expenditures expanded sharply in the 1930s as a result of President Roosevelt's New Deal social policies, which were created in response to the Great Depression. The GAO's role, which originally focused on ensuring payments were made properly, grew in importance. By 1945, at the end of World War II, government spending again soared, and the GAO began auditing government agencies to ensure they operated according to their purpose.

By the 1970s, the GAO's work expanded to include reviews of agency work on consumer protection, the environment, and social welfare. Agency personnel consisted of only accountants. But that soon expanded to include scientists, care professionals, and computer scientists. 

The agency continues to evaluate government spending programs, including how it appropriated funds related to the COVID-19 pandemic, which amounted to $4.8 trillion.